Gajah Tunggal Eyeing US Tire Market After Tariff Raised on Chinese Products

12/5/2009

Gajah Tunggal Eyeing US Tire Market After Tariff Raised on Chinese Products

 

Indonesia’s biggest tire maker, PT Gajah Tunggal, expects tire sales to increase next year as car and motorcycle sales rebound and the US looks to import more non-Chinese tires.

“We are looking to see if we can fill the void left after the US hiked import tariffs on Chinese tires,” Gajah Tunggal director Catherine Widjaja said on Thursday.

The US government announced in August that it would impose tariffs of up to 35 percent over the next three years on Chinese tires for cars and light trucks. US-based tire sellers imported roughly 17 percent of their tires from China last year.

Catherine said Gajah Tunggal could ramp up production provided that demand improved in 2010. “If demand picks up next year there could be opportunities for expansion. But for the time being, we’re monitoring cautiously, and will just optimize our production capacity,” she said.

Gajah Tunggal produces around 35,000 radial tires a day, which it plans to increase to 45,000 a day by 2012. It also plans to increase motorcycle tire production from the current 37,000 tires a day to 105,000 per day by 2012.

The company exports around 38 percent of its tire production with the US the largest market.

Gajah Tunggal revenue is expected to be flat this year, at around Rp 7.9 trillion ($837.4 million), with 20 percent growth expected next year. “Despite weak sales in the first half, sales really picked up in the third quarter and we hope it will continue in the fourth also,” Catherine said.

The company leads the domestic motorcycle tire market with a 59 percent market share, and the bias ply tire market (used on trucks and heavy machinery) with 49 percent. In the radial tire market, Gajah Tunggal is third with 20 percent of the market, behind Bridgestone (41 percent) and Dunlop (22 percent).